Why Tesla is too big to fail

Is Tesla Teflon?

You might be excused to think that after the summer madness, the company and the CEO, Elon Musk, have just ended. There was the ongoing battle against the short sellers, Musk accusing a diver involved in the rescue of pedophilia in Thailand, the now infamous "secure tweet", all the other tweets, heartbreaking interviews, the mad rush of the production of Model 3, the assembly line in a tent, the trial of the SEC, the SEC regulation. Oh humanity!

And yet, even in last week's market turmoil, which caused a lot of damage to tech stocks, Tesla held firm. That's right, stocks have slipped. But if you think the company is overvalued anyway, it makes sense to settle at around $ 250.

In a few weeks, Tesla will announce its results for the third quarter, and the results should yield a profit, or at least a result close to profit. This would be the first of Tesla since the third quarter of 2016. If that were to happen, it should be enough to calm the wind of negativity around Tesla, if only briefly … as long as Musk does not violate the good news by acting ill-informed.

For what is worthwhile, Tesla's quarterly revenues should also increase, reminding investors that even if the company spends a mountain of cash, it is building a new mountain of new money thanks to its growing budget.

Tesla could end the year by delivering between 200,000 and 300,000 vehicles, a significant improvement over the 100,000 vehicles of 2017, a record for the automaker. Even though the electric car market is tiny – just 1% of global sales – and several major competitors have launched new electric vehicles, Tesla has it all. Most of the electric cars that hit the road these days are Teslas.

The indispensable society

This makes Tesla an anchor brand and, unfortunately for opponents of the company, an indispensable business. With a current market capitalization of $ 45 billion, even after last week's sale, Tesla's long-standing $ 461 million loan to the Ministry of Energy appears to be an incredibly good bet that has helped achieve its goal: create a viable electrical solution. vehicle market in the United States.

Despite the hostility of the Trump administration with regard to the science of global warming, the publication last week of an objectively terrifying report of a special panel UN Climate Change clearly shows that if humanity does not do what Musk has always wanted to do, leave behind the era of fossil fuels – then the catastrophe could strike as early as 2040.

To avoid a potentially existential threat to civilization, we will need many more electric cars to replace those that run on gas, and we will have to produce electricity using a combination of nuclear energy and resources renewable.

Sometimes it's good to know what you're up against and have a deadline. Two decades are enough to replace most of the automotive supply of the developed world with alternatives powered by electricity. Of course, we must start now and we can not afford to lose Tesla's footprint. The only other successful electric vehicles on sale at the moment are the Chevrolet Bolt and the Nissan Leaf, and although they sell well, they do not match the impact of Tesla.

Why Tesla is too big to fail

The bottom line is that the species needs Tesla to sell 200,000 cars this year, 400,000 cars next year and as soon as possible, millions of vehicles a year. And that will not be enough. All other automakers must join Tesla and replace the world's one billion gasoline cars with much cleaner alternatives.

This means that Tesla is too big to go bankrupt, even if it is not very big. What is actually too important, it is the impact of Tesla. without the insistence of Musk, the limited electric car race we are witnessing would not have happened. If Tesla collapses and if it reaches zero, as some of its most aggressive short sellers want, we could lose five or ten years in the twenty with whom we have to work.

We simply can not lose those years.

So, just as General Motors and Chrysler were too big to fail in the financial crisis – their demise would have displaced hundreds of thousands of workers and created a gulf in US GDP – Tesla is too big to fail in the face of a climate crisis .

If you are a fearless businessman, you can conclude that it is not fair. And you would be right. But some things are more important than business and the prospect of starvation, disease and planetary destruction is such. I admit that in this context, Tesla has an exorbitant privilege. And the business is not our only hope. There are many other ways to decarbonise the world and avoid a disaster.

But Tesla is the only company at once to tackle the problem of emissions at source, eliminating exhaust pipes, eliminating emissions and proposing additional solutions. For example, Musk is probably the world's largest promoter of solar energy. He also called for a carbon tax, which, along with the carbon markets, is one of the ways in which economists frequently argue that we could achieve some of the more ambitious goals of science in rescue. climate.

I'm 51 years old and I'm here to tell you that 20 years is not a lot of time. If only some of the dark predictions of the United Nations Group become reality by 2040, we will deeply regret not acting when we knew what was going to happen until we were hungry or drowned. time. free time to engage in deep regret.

If you really trust capitalism, you have to agree from time to time that the system creates a business that counts more than just money and the ridiculous ups and downs of the stock market. Tesla is one of these companies. Live with it – assuming you want to continue living on a habitable Earth.